Commissioner of Income-tax (TDS) v. Hakmichand D. and Sons
[Citation -2017-LL-0911]

Citation 2017-LL-0911
Appellant Name Commissioner of Income-tax (TDS)
Respondent Name Hakmichand D. and Sons
Court HIGH COURT OF GUJARAT AT AHMEDABAD
Relevant Act Income-tax
Date of Order 11/09/2017
Judgment View Judgment
Keyword Tags deduction of tax at source • technical service fee • licence fee • oral order • professional service
Bot Summary: The issue in the nutshell pertains to the disallowance under section 201(1) read with section 194J of the Act on the payments made by the assessee by way of license fees to Indian Railway Catering and Tourism Corporation Limited 'IRCTC' Page 1 of 3 HC-NIC Page 1 of 3 Created On Tue Sep 12 09:57:44 IST 2017 O/TAXAP/663/2017 ORDER for short. The Revenue contends that the assessee had to deduct tax at source as provided under section 194J of the Act. Section 194J of the Act raises the requirement for deduction of tax on payment of professional or technical service fee and for obvious reasons therefore this provision would have no applicability in the present case. Section 194C of the Act pertains to requirement of deduction of tax at source on payments to contractors. Under sub-section of Section 194C, any person responsible for paying any sum to any resident for carrying out any work in pursuance of a contract between the contractor and the specified person is required at the time of credit of such sum in the account of the contractor or at the time of payment to deduct tax at specified rate. In the present case, the payment of licence fee was made by the contractee to the contractor and therefore section 194C of the Act would not apply. In plain terms, section 194C of the Act does not cover the present situation where the assessee was making payment of licence fee to the IRCTC for catering service.


O/TAXAP/663/2017 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 663 of 2017 TO TAX APPEAL NO. 668 of 2017 COMMISSIONER OF INCOME TAX (TDS)....Appellant(s) Versus HAKMICHAND D.AND SONS. Opponent(s) Appearance: MR BHATT WITH MRS MAUNA M BHATT, ADVOCATE for Appellant MR SAURABH SOPARKAR WITH B.S.SOPARKAR for Opponent CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE BIREN VAISHNAV Date : 11/09/2017 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue has filed these tax appeals arising out of common judgement of Income Tax Appellate Tribunal dated 09.11.2016 raising following question for our consideration: Whether assessee is liable to deduct tax at source for license fees paid to IRCTC? ' 2. issue in nutshell pertains to disallowance under section 201(1) read with section 194J of Act on payments made by assessee by way of license fees to Indian Railway Catering and Tourism Corporation Limited ['IRCTC' Page 1 of 3 HC-NIC Page 1 of 3 Created On Tue Sep 12 09:57:44 IST 2017 O/TAXAP/663/2017 ORDER for short]. Revenue contends that assessee had to deduct tax at source as provided under section 194J of Act. Failure to do so would invite disallowance under section 201 for such expenditure. Similar issue came up for consideration before this Court in Tax Appeal No. 569 of 2017 in context of disallowance made by Assessing Officer under section 40(a) (ia) of Act. Court rejected Revenue's appeal making following observations: 4. Having heard learned advocates for parties, what emerges from record is that assessee was granted contract by IRCTC for providing catering service for which assessee would make payment in nature of licence fee. According to Revenue, on such payments, assessee had to deduct tax at source which admittedly assessee had not done. Section 194J of Act raises requirement for deduction of tax on payment of professional or technical service fee and for obvious reasons therefore this provision would have no applicability in present case. Section 194C of Act pertains to requirement of deduction of tax at source on payments to contractors. Under sub-section (1) of Section 194C, any person responsible for paying any sum to any resident for carrying out any work in pursuance of contract between contractor and specified person is required at time of credit of such sum in account of contractor or at time of payment to deduct tax at specified rate. Tribunal was thus right in observing that section 194C of Act would apply in case of payment being made by contractor to contractee and not vice-versa. In present case, payment of licence fee was made by contractee to contractor and therefore section 194C of Act would not apply. 5. We are broadly in agreement with view of Tribunal. In plain terms, section 194C of Act does not cover present situation where assessee was making payment of licence fee to IRCTC for catering service. In that view of Page 2 of 3 HC-NIC Page 2 of 3 Created On Tue Sep 12 09:57:44 IST 2017 O/TAXAP/663/2017 ORDER matter, we see no reason to interfere. However, this may not be seen as our confirmation of Tribunal s view that IRCTC was government body and therefore also requirement of deducting tax at source did not arise or that proviso to sub-section (1) of Section 201 may have retrospective effect. We keep both these questions open. 3. In result, Tax appeals are dismissed. (AKIL KURESHI, J.) (BIREN VAISHNAV, J.) Jyoti Page 3 of 3 HC-NIC Page 3 of 3 Created On Tue Sep 12 09:57:44 IST 2017 Commissioner of Income-tax (TDS) v. Hakmichand D. and Son
Report Error